Author Results for Evan Newmark

Whatever you may think of Greg Smith’s resignation from Goldman Sachs – and I happen to think very little of it – you should admire his flair for publicity.

He will now get the 15 minutes of fame that would have forever eluded him as just another mid-level derivatives specialist grinding it out on Wall Street.

Whether or not Mr. Smith gets more than 15 minutes remains to be seen. No doubt the media wants this story to run. No doubt lots of Americans love to hate Goldman Sachs.

But, oddly, and in contradiction to Mr. Smith’s own assertions, plenty of those “Muppet” clients have stood loyally with Goldman through some very rough years and rough press. Remember the AIG and Abacus hearings on Capitol Hill? It’s hard to get worse PR than that and stay in business.

So, did Mr. Smith reveal in his op-ed some further ugly secrets or double-dealing shenanigans that were till now unknown to Goldman’s clients?

No. In fact, almost no one on Wall Street would take issue with Mr. Smith’s main contention that Goldman’s “clients first” culture has been displaced by a “profits first” culture.

It’s just that U.S. large-cap stocks are already pricing in lots and lots of bad news. To be comfortable buying stocks at this level, I only have to be less pessimistic about future long-term corporate earnings than all the panicky sellers.

Thank goodness for the utter mess our politicians are making down in Washington.

It’s not only good summer entertainment. It’s also giving the American public the one thing it needs most: an education on just how screwed up we’ve become, both in our nation’s finances and in our collective mindset.

Ironically, if you work on Wall Street, you better hope not. At $23 bucks a share, Morgan Stanley is trading near its 52-week low. Goldman’s shares are off 21% since the start of the year. That 2011 will be a crummy year on Wall Street is already the accepted wisdom.

But the prices of Goldman and Morgan Stanley shares, trading at or below book value, are hinting at something worse. Business doesn’t just stink now. It’s going to stink for a long, long time to come.

If you’re looking for further confirmation that nothing ever really changes on Wall Street, check out the just-released research on LinkedIn Corp. It’s the old Wall Street black magic circa 1999. We have four firms that underwrote theLinkedIn IPO at $45 a share now initiating coverage with buy notes and price targets of between $85 and $92. That’s a 100% markup, but it’s actually even bigger than that. LinkedIn launched its IPO roadshow with a price range in the low $30s. That means Wall Street reached into its hat and pulled out a LinkedIn now worth 200% more — from a $3 billion valuation to $9 billion in just three months. Abracadabra!

“In the end, the folks I hear from in letters or meet when I travel across the country – they aren’t asking for much. They’re just looking for a job that covers their bills. They’re just looking for a little financial security. They want to know that if they work hard and live within their means, everything will be all right. They’ll be able to get ahead, and give their kids a better life. That’s the dream each of us has for ourselves and our families.”

– President Obama’s weekly radio address, June 11, 2011

At this point, it’s pretty amazing that President Obama can serve up these sugary homilies with a straight face.

Our economy is choking on over $14 trillion of debt brought on by millions of middle-class Americans “not asking for much,” just their Medicare, Social Security and unemployment checks.

But the president, now seeking re-election, still can’t bring himself to level with his citizenry.

The truth? Most Americans want each and every entitlement society can offer. They don’t want “to live within their means.” They want more than just a “little financial security.”

And, as long as this culture of entitlement pervades our society, there is no way everything will be all right….

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Deal Journal is an up-to-the-minute take on the deals and deal makers that shape the landscape of Wall Street, including mergers and acquisitions, capital-raising, private equity and bankruptcy. In short, wherever money changes hands. Deal Journal is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal’s David Benoit is the lead writer, with contributions from other Journal reporters and editors. Send news items, comments and questions to deals@wsj.com.

Dealpolitik is Ronald Barusch's strategic look at deals currently making the headlines as well as the major forces at work in the deal-making world. He was a M&A lawyer with Skadden, Arps, Slate, Meagher & Flom for over 30 years. He retired in 2010 after 25 years as a partner at the firm. Click here for his current and archived columns.